Joint Committee on the Draft Charities Bill

Joint Committee on the Draft Charities Bill First Report

8 Fund-raising and public collections

270. Maintaining public confidence in charities is a major driver behind the draft Bill. One concern is that the fund-raising methods used by some charities could undermine that confidence. Concern has, for example, recently been expressed in the media about the solicitation of direct debit or standing order commitments (sometimes known as face-to-face fund-raising). The draft Bill provides both for self-regulation of fund-raising generally and new arrangements for one specific aspect of fund-raising, public collections, including provision to bring clearly within the scope of regulation direct debit or standing order solicitation. This combination of statutory and self-regulation should address concerns about this form of fund-raising. Statutory regulation should for example, guard against too many collectors being on the streets at any one time. Self-regulation should ensure that these collections are conducted in an appropriate manner (for example, collectors are not overly aggressive or hectoring). As explained in more detail below, should self-regulation fail, the Secretary of State has reserve powers in the Bill to introduce further statutory regulation. In this chapter we consider first the effect of the draft Bill on the self-regulation of fund-raising generally. Secondly, and in more detail we review the new arrangements for public collections. Thirdly, we refer to the statements to be made by professional fund-raisers and commercial participators.

Self regulation of fund-raising

271. Recently, an independent commission (the Buse Commission) was established on the initiative of the Institute of Fundraising to make proposals for the consolidation and development of fund-raising self-regulation across all fund-raising methods including street collections, direct mail and TV and press advertising. The Commission reported in January this year and consideration is being given by sectoral bodies to how the work might best be taken forward.[302] The draft Bill contains (clause 36) a reserve power for the Secretary of State to make further regulations to control fund-raising. The intention is that this power would only be used should the new self-regulatory scheme fail.

Evidence

272. We received a significant number of submissions supporting self-regulation by the charitable sector. NSPCC, however, said their support was conditional on the Secretary of State having power to intervene if self-regulation did not work, since they explained "under current arrangements, self-regulation is not co-ordinated and is too informal".[303]

273. The draft Bill does not outline the criteria against which the success of a self-regulatory scheme will be measured, and therefore under what circumstances the reserve power will be used. A number of organisations, including the Institute of Fundraising, Help the Aged and PricewaterhouseCooper, have called for the publication of criteria by which this would be determined. In oral evidence, we heard that charities "need to know where the Home Secretary would determine that self-regulation had not worked" and that the criteria be "proportionate and reasonable".[304]

274. Some organisations wanted to see criteria on the face of the Bill.[305] The Institute of Fundraising, however, suggested that criteria should not be set out in statutory guidance because further research and consultation were needed in the sector to establish the scope of the self-regulatory scheme and what the criteria for success should be. They considered that a successful regulatory scheme should have targets set by the sector, not the Government and that the criteria should evolve alongside fund-raising techniques.[306]

275. In its response to the Strategy Unit, published in July 2003, the Government stated its intention to publish the criteria by which the Home Secretary would judge the self-regulatory scheme. In evidence, the Government told us first that they intended to work with the Charity Commission to establish criteria,[307] and later that they would work with the sector to do so.[308] It would have been useful for the public and the Committee to have been able to scrutinise the criteria alongside the draft Bill.

Conclusion

276. On the basis of the limited evidence we have heard, the Committee supports the approach of encouraging effective self-regulation backed by the prospect of reserve powers if that is unsuccessful.

277. We recommend that the explanatory notes published with the Bill set out more fully the criteria by which the Secretary of State will determine whether self-regulation is working effectively.

Public collections

278. One way in which charities raise funds is through public collections. There are basically two types of public collection covered by different acts dating respectively from 1916 and 1939:[309]

a) Street collections - collections in the street or other public places - the current street collections legislation does not cover semi-public places like public spaces in railway stations or in airports. There is also a lack of clarity about whether it covers solicitation for direct debit commitments or not - some local authorities take the view that such collections need to be licensed, others do not.

b) House-to-house collections.

The current situation

279. Public collections have often caused concern because of their potential to create a public nuisance and the risk that they may lead to abuse - for example, people fraudulently claiming to be collecting for charity. The present regulatory regime is based on the Police, Factories etc, (Miscellaneous Provisions) Act 1916 for street collections and the House-to-house Collections Act 1939. Essentially, this legislation provides as follows.

a) Street collections (except for London) are under the control of local authorities, which have powers to license them (but are not obliged to). Most local authorities (but not all) require street collections to have a licence.

b) House-to-house collections (except for London) are licensable by local authorities. The legislation provides for a national system and every local authority is expected to license house-to-house collections (but they do not necessarily do so). But a charity collecting over a large part of the country can get an Exemption Order from the Home Office - this exempts them from local authority control, so they do not have to obtain a licence from a large number of local authorities but they are still required to notify the local authority of their intention to collect in their area.

280. In London, both street collections and house-to-house collections are controlled by the police instead of local authorities. Local authorities have different views on the licensing of the collection of direct debit commitments. However, generally speaking such public collections are licensed when conducted house-to-house but not in the street. Under the current legislation, local authority decisions not to grant a house-to-house collection licence can be appealed to the Home Office. There is no formal right of appeal against decisions not to grant a street collections licence.

281. There has long been a feeling in the sector and Government that this messy system should be replaced by one which was more integrated and provided better and more comprehensive regulation. Provisions for an integrated system of control were enacted in Part III of the Charities Act 1992 but never brought into force.

The draft Bill

282. The draft Bill and associated measures will set up a new comprehensive scheme of regulation, the key elements of which are:

a) All local authorities would be required to license all public collections (except very small and local ones - e.g. carol singing), including direct-debit collections and collections in semi-public areas such as supermarket forecourts or railway stations. In London, responsibility for public collections would be transferred from the police to the London boroughs.

b) Licensing would have two stages:

i. The Local Authority would issue a certificate of fitness. This would certify that the collection promoter was fit to carry out a collection (e.g. had no relevant criminal convictions). Once issued, the certificate would be valid for up to five years.

ii. The Local Authority would issue a permit based on whether there was capacity in their area (that is, whether or not too many collections were being conducted).

c) House-to-house collections would be licensed in the same way but (i) only a certificate of fitness would be required and (ii) house-to-house collections of goods (as opposed to money) would require no licensing at all but in both cases notification to the local authority would be required.

d) Instead of National Exemption Orders issued by the Home Office allowing charities to collect house-to-house over large areas of England and Wales, there would be a "lead authority" system. Under this, a charity could get a certificate of fitness from the local authority in whose area its registered office is located. This would then apply throughout England and Wales.

e) For street collections, the organisation would then only need to get a permit from the local authority in whose area it wished to collect.

f) For house-to-house collections, the organisation would only need to notify the local authority in whose area it was collecting of the dates and locations of collections.

283. Clause 39 of the draft Bill requires promoters to notify door to door collection of goods to the local authority, specifying the purpose for which the proceeds of the appeal are to be applied, the date or dates on which the collection is to be conducted, the location within which the collection is to be conducted (and such other matters as shall be prescribed). Such notifications must be made at least 14 days before the collection date.

284. Clause 41 of the draft Bill provides that applications for permits for street collection of cash and direct debit commitments cannot be made more than six months before the start of the collection and should be made at least 14 days before the collection date.

285. These proposals have implications for charities and local authorities and the Regulatory Impact Assessment attached to the draft Bill provides estimates of their costs and benefits.

Benefits and costs

286. The benefits of the proposed scheme are not quantified but are said by the Home Office to be:

a) Significantly reducing the confusion which currently exists among charities, local authorities, professional fund-raising organisations and the public;

b) Promoting greater uniformity in the application of the law;

c) Increasing public confidence in public collections.[310]

287. The Regulatory Impact Assessment (RIA) identifies three main sources of cost for the proposals:

a) Costs to local authorities outside London. The RIA says these should be negligible: "The scope of the current licensing regime would be extended under the new scheme but the number of checks undertaken by each individual local authority would be reduced".[311]

b) Costs to the London local authorities as a result of the transfer of the licensing regime from the police to them. The RIA estimates this as £32,500-£103,584 a year.[312]

c) The costs of appeals to the Magistrates' courts against the refusal or withdrawal of applications for a certificate of fitness or a permit. The RIA estimated these costs as £14,104-£26,404 a year.[313]

288. The Institute of Fundraising, the Institute of Licensing, and the Local Government Association all told us that the RIA's assertion that the new scheme would be cost-neutral was untrue.[314] The PFRA also told us that they believed the estimated costs for London local authorities were far too low. They were based on the Metropolitan Police's costs of £33,000 for 226 applications. But, the PFRA told us, the police figures were based on the number of cash collections, the only ones the police licensed. Local authorities, under the new scheme, would have to license non-cash collections (e.g. soliciting donations by direct debit). PFRA thought that a conservative estimate of the number of applications to London local authorities would be 14,000 a year. The fact that London local authorities had no previous experience of licensing charitable collections also meant that extra costs would be incurred as they climbed the learning curve.[315]

289. LGA sent us a submission setting out the reasons they thought extra costs would be incurred by local authorities as a result of the new scheme. These included:[316]

a) It is not compulsory to license street collections and some local authorities currently do not do so. The new arrangements will make it compulsory for all local authorities in England and Wales to licence street collections in their area. Authorities which had not operated the old arrangements will not make offsetting savings by moving to the new arrangement therefore, as the RIA assumes.

b) The new arrangements increase the types of collections to be licensed (e.g. solicitations for direct debits): this will increase the number of applications.

c) Local authorities will have a duty to provide fair access to applicants - this means they will have to develop a licensing policy. The LGA estimate this will cost about £12 million.

d) The lead authority system may lead to an increase in the number of organisations conducting collections across several local authorities, leading to further costs.

290. A further - and most important - source of cost, however, would be enforcement of the new arrangements. This has not been taken account of in the RIA. It was emphasised to us that without enforcement the new arrangements simply would not produce the benefits they promised. The Institute of Fundraising told us:

"Enforcement is a very important point… because under the current regulation enforcement is pretty much not carried out at all. It is getting new structures in place and ensuring that they are properly funded. If that does not happen then the benefit of the universal application of the proposals simply will not be felt because it will not be enforceable".[317]

291. The RIA itself lends support to this point:

"Some local authorities have said that they are unable to undertake or undertake only limited levels of enforcement in connection with the current licensing regime. Of the 33 local authorities spoken to in relation to this matter 10 indicated that they undertook no enforcement action… a further seven said they were able to undertake a limited or small amount of enforcement work".[318]

292. We recommend that the Home Office revisit its financial estimates in discussion with the charitable sector and Local Government Association with a view to ensuring the real Bill is accompanied by a more through assessment of the costs and benefits of the scheme for public collections.

293. The Committee was also concerned that the measures in the Bill should not place an undue extra burden on charities, and also that the Charity Commission should have the resources to take on any extra duties. We recommend that the Home Office consider both the regulatory burdens and the resource issues carefully in bringing forward proposals in the new legislation.

Evidence

294. In considering the workability of the fund-raising proposals we have examined three issues raised in the evidence:

a) Will the new scheme combat abuse?

b) Are the notification arrangements satisfactory?

c) Should certificates of fitness to conduct public collections be issued by local authorities?

295. Evidence on the current extent of abuse in public collections pointed in two directions. The Regulatory Impact Assessment says:

"There are no figures currently available on the level of bogus street collections but respondents to [..] consultation, generally did not believe that bogus street collecting activity represented a major problem."[319]

296. The Institute of Fundraising (IOF) told us:

"Levels of fraud in relation to public activities are very low. Most of the evidence about it is anecdotal anyway but a case of fraud in relation to a charity has a disproportionate impact on the public and it is covered by the media. You very seldom see 'Charities Performing Well Today'. What you do see is 'Illegal Rose Selling Scam Nets £30,000 in Bolton Pubs'".[320]

297. On the other hand, we received first-hand testimony from the Institute of Licensing that bogus fund-raising in Leeds was a very serious problem (this evidence is summarised in the box below). The Local Government Association (LGA) supported this evidence. So did the witness from the Home Office, who told us: "I cannot see anything which persuades me that Leeds would be a special case. If the question is might this be going on in other cities of similar size, I think the indication must be yes because I do not think Leeds is special".[321]

The experience in Leeds
"There is a large problem with bogus fund-raising.... Forty-eight [prosecutions have been brought from 2002 to date] with regard to predominantly fraud and deception. The police are not interested in taking these cases forward but they should be taken out of the local authority hands. [The problems are related to] clothing collections.......street collections, collections of money from pub to pub. We are also talking about clothing banks which are placed indiscriminately in car parks...... We are talking about mass fraud across the country........[These collections]..... are purporting to be on behalf of charities. They obtain headed notepaper from charities and use that to legitimise their collections throughout not just Leeds. One collection that I found that we enforced in Leeds we tracked back to Portsmouth and worked with Portsmouth local authority to undertake a joint prosecution on the specific company involved".[322]

298. Swindon Borough Council told us:

"Our town centre is plagued by highly questionable companies selling prize competition cards....The standard patter used.....[is].... 'would you like to nominate a organisation to receive a specially converted minibus'. The words (in clause 37 of the draft Bill) 'in association with a representation that the whole or any part of its proceeds is to be applied for charitable, benevolent or philanthropic purposes' are not sufficient to defeat these semantic tricks. Some reference to "or implied representation" would solve the problem. Second hand dealers who make reference to the 'Third World' and that all garments "are to be worn again" would be similarly thwarted".[323]

299. Would the draft Bill deal with this problem? Again, the evidence we examined pointed in different directions. The Institute of Licensing told us: "The provisions laid down [in the Bill] for compliance will combat illegal collections and hopefully help eradicate fraud and deception providing a better climate for legitimate charitable collections, thus increasing public awareness and restoring public confidence".[324] The Institute gave as an example of how the draft Bill would help that it if raised fines from £200 to £5,000.[325]

300. There were, however, other measures which the Institute thought would help deal with abuse which the draft Bill does not contain. The Bill does not require unattended receptacles (e.g. collection tins on shop counters) to be licensed, or house-to-house collections for goods; and it does not oblige local authorities to inform lead authorities of offences committed by organisations applying for a certificate of fitness.[326]

301. The Public Fund-raising Regulatory Association pointed out that since there is a lack of statutory guidance on the details of the new licensing scheme, it was likely to increase rather than reduce inconsistent practice among local authorities.[327] Furthermore, the Institute of Licensing said that the proposal to remove the licensing of public collections in London from the police and give it to the London local authorities, which had no experience of this function, would be unlikely to reduce abuse, at least in the short-term.[328]

302. The key problem, we were told by LGA and the IOF, was not so much what provisions the draft Bill contained as whether they would be enforced. That in turn depended on whether there would be funding for enforcement, something both bodies were clearly not convinced would be forthcoming.[329] The Institute of Licensing told us:

"The draft Bill… is such an improvement on the legislation we work under currently. However, if it cannot be enforced by the local authorities it will have no bearing on the bogus fund-raising… I know that within England and Wales there are few local authorities currently that can afford or have the manpower to undertake enforcement and although the provisions have been set out in the draft Bill, whether or not they are used to combat this will be another matter".[330]

303. We recommend that the Home Office urgently review its proposals on the regulation of fund-raising to ensure that the crimes described to us by Leeds City Council and Swindon Borough Council are adequately tackled by the real Bill.

Notification arrangements

304. We received a number of submissions which expressed concern about the notification requirements for the collection of goods house-to-house. Acorn Children's Hospice said that while the

"removal of collections made house-to-house from the licensing system is to be welcomed...the benefit of this de-regulatory measure is totally negated by the specific notification requirements".[331]

305. The Association of Charity Shops told us that:

"specific date notification is currently not required by local authorities granting licenses to collect [goods house-to-house]; instead a generic description of the frequency and the general location of the collections is accepted in granting licenses".[332]

306. They gave the example of a charity currently making 10 applications for licences and submitting 10 reports on their collecting activity each year who would be required to make 1,250 notifications a year ("assuming that no one shop collects across more than one area very unlikely in urban settings"). They went on say that "the bureaucratic burden on the charity would significantly raise its operating costs".[333]

307. The Association of Charity Shops also explained in their written evidence that the requirement to make the notification 14 days in advance "takes no account of how house-to-house collections of goods are made and is unworkable". They explained that charity shops often have little storage space and organise collections at short notice when stocks are running low and when they have a volunteer driver available.[334]

308. The British Red Cross said in their written evidence that the provision in the Bill that applications for permits can not be made more than six months from the date of the first collection will cause them difficulties. They have an annual programme of national collections known as Red Cross Week and start planning for this major event at least one year in advance.[335] The Hospital Broadcasting Association make a similar point in their submission, suggesting that prospective collection promoters should be able to apply for a permit up to 18 months before the intended collection in order to make the planning of annual campaigns easier.[336]

309. We recommend that the Home Office should review the notification arrangements before bringing forward the real Bill. We recommend that the Bill should include an order-making power to vary the time limits for notifications contained in clauses 39 and 41 of the draft Bill to enable these to be adjusted in the light of experience.

310. The Home Office should also consider whether, when a charity has notified a local authority of a collection, it should also inform the authority of the amount raised in the collection and the local authority should publish that information as soon as possible on its website.

Lead authority

311. As we have seen, clause 40 of the draft Bill introduces a system of "lead authorities". Under this system, fund-raising organisations wishing to collect in more than one local authority area have to obtain a certificate of fitness from their "lead authority" (that is, the local authority in which the charity has its registered address). They will then be allowed to collect in any local authority area in England and Wales provided the local authority issues a permit saying its locality had the "capacity" to accommodate the collection (that is, that not too many collections are being conducted in the area). The Institute of Fundraising welcomed this proposal.[337]

312. Others were opposed to the 'lead authority' model for determining whether charities are fit to carry out public collections. The PFRA told us:

"Adopting the Lead Authority model will mean the burden of unified regulation falling disproportionately heavily in certain areas. A limited number of London boroughs will receive a significant volume of applications reflecting the concentration of charities [registered addresses] in certain areas. London Boroughs currently have no responsibility for charitable fund-raising; it is fair to assume that this will present significant management challenges to some of the Boroughs involved".[338]

313. The Institute of Licensing expressed similar concerns.[339] They did not think that local authorities would either have the competence or the resources to act as lead authorities. They suggested that the Charity Commission should be the lead authority, or some other body with experience of charities.[340] The Royal Borough of Kensington and Chelsea, which might be expected to bear some of the new responsibilities for issuing certificates of fitness, said it "will be wholly unequal to the task of administering the licensing functions conferred upon it in the absence of very significant additional funding".[341] The Local Government Association agreed. They told us:

"The most appropriate body to be the lead authority would be the Charity Commission or another such body. If you think of the burdens that could fall, say, on Islington, Camden and the Corporation of London where a number of national charities are based, to be the lead authority to assess those charities, then a burden could fall upon those central London local authorities disproportionately to other authorities. A national body like the Charity Commission, which has a wealth of experience both in terms of supporting charities and also regulation, would be the most appropriate in my view".[342]

314. In response to the suggestion that the Charity Commission be the lead authority, the Minister said:

"People have talked about the burdens on the Charity Commission in this Bill and I think that will be an additional unnecessary burden and that it is a role which it sounds as though the officer for Leeds [the representative of the Institute of Licensing] has demonstrated that local authorities can properly provide and should".[343]

315. However, the "officer for Leeds" had spoken to us eloquently about enforcement of the licensing scheme and not about the issuing of certificates of fitness. In fact, she had recommended that the Charity Commission should issue certificates of fitness.[344] While we agree with the Minister that this would be an additional burden on the Commission, we believe it is in a better position to judge fitness to carry out public collections and to do so at lower cost than local authorities.

316. In conclusion, we recommend that, while local authorities should retain powers of enforcement, the Charity Commission, rather than local authorities, should be the lead authority for granting certificates of fitness to carry out public collections.

Other points on fund-raising

317. The following additional points were made by Fund-raising Initiatives, the Institute of Fundraising and the British Red Cross, in relation to fund-raising:

"As the Bill is currently drafted charities headquartered in Scotland and Northern Ireland will not be able to fundraise in England and Wales. We believe this was unintentional and would seek further clarity."[345]

"the right of appeal, set out at [clause] 40, 66H, should also apply in respect of decisions taken by local authorities relating to permits to collect and notified collections. The draft Bill is not clear that the right of appeal against local authority decisions extends beyond refusal to issue a certificate of fitness."[346]

"when there is unauthorised fund-raising although s62 of the Charities Act exists this is a costly exercise for charities [and] we suggest that consideration is given to referring such matters to the Charity Commission to initiate for the public benefit."[347]

318. The Charity Law Association told us:

"We are not sure that the definition of 'charity fund-raising', in Clause 36 (new Section 64 A(2) of the 1993 Act) really deals with the bogus fundraiser who is raising funds for unspecified benevolent/philanthropic purposes that are not charitable. We wonder whether there ought to be a Subsection (2) (d): "persons or companies raising funds for general charitable, benevolent or philanthropic purposes (in new Section 65B of the Act)".[348]

"This is a good opportunity to deal with the anomaly in the Charities Act 1992 (CA '92) whereby a Charity Promoter (CP) who raises fund for charitable purposes (as opposed to a particular charity) is subject to less than equivalent penalties. This is dealt with under regulations 7 and 8 of the Charitable Institutions (Fund-raising) Regulations 1994. This anomaly should be addressed.

"In particular s62 CA '92 gives power to a charity to prevent unauthorised fund-raising, but this can be a costly exercise and it may be beneficial if the charity could refer the matter to the Charity Commission to initiate for the public benefit, which would relieve the charity from having to do so.[349]

319. We recommend that the Home Office review these other points on fund-raising to ensure they are covered in the proposed legislation.

Statements by professional fund-raisers and commercial participators

Current position

320. Section 60 of the Charities Act 1992 requires a professional fund-raiser (a fund-raising business either run by an individual or an organisation) to state in general terms the method by which their remuneration is determined. The same clause requires a commercial participator (an organisation entering into a joint promotion with a charity or voluntary organisation) to make a general statement outlining the method of determining the benefit to the charity or voluntary organisation of a promotional venture.

Proposals in the draft Bill

321. Clause 35 of the Bill amends section 60 of the 1992 Act so that professional fund-raisers and commercial participators will be required to provide more precise information about their remuneration. Current requirements for professional fund-raisers are described in the explanatory note to the clause as too imprecise "offering little assistance to those they were designed to help".[350]

322. Under the draft Bill, professional fund-raisers will be required to state the actual amount of their remuneration or, if the actual amount is not known at the time of the appeal, will be required to give as accurate an estimate of the amount as is reasonably possible in the circumstances. Commercial participators will similarly be required to indicate the actual amount or, if this is not known at the time, an estimate of the amount, calculated as accurately as is possible in all the circumstances, which is to be given or applied for the benefit of the charity or voluntary organisation as a result of the promotional venture. This amount is called in the Bill 'the notifiable amount'.

Professional fund-raisers

Evidence

323. Evidence received from Action on Disability and Development argues that while it makes sense to require paid fund-raisers to declare that they are paid and not volunteers, there should not be a requirement to provide more comprehensive financial information at the time of the appeal:

"We do not feel it is appropriate to automatically disclose specific amounts of remuneration. It is not relevant to each person, and therefore could serve to make people unnecessarily suspicious about why it is being pressed upon them.....We do feel it is important to distinguish between paid fund-raisers and volunteers and support the current position where a declaration to that effect is made either verbally or in writing (or both) before the potential donor signs the gift form. Charities are not required to make such a specific declaration in other areas of their work.[351]

324. The Dialog Group picked up this theme arguing that transparency about costs was not required for all types of fund-raising appeals:

"Why the requirement to declare public collections costs when there is no such burden on press, direct marketing or TV activity? This is disproportionate, inconsistent and prejudicial......Charities can provide the relevant information to the Charity Commission through SORP/SIR, and then clearly communicate cost to income ratios, in context, via its annual report. This is a consistent and proportionate response to the issue of transparency".[352]

325. The CLA suggest that one problem with the proposal is that it will continue to "apply only to non-employed professional fund-raisers".[353] The implication is that the main distinction of interest to the public is whether a fundraiser is paid or not. Beyond this it matters little whether the fundraiser is a paid employer of the fund-raising organisation or of another organisation or an individual providing fund-raising services under contract.

326. Bates, Wells and Braithwaite also considered that the nature of the payment should be disclosed. The implication was that this might be more important to members of the public rather than the exact amount of the remuneration:

"In respect of third party fund-raising by a commercial third party.... it should be obliged to make it clear that it is paid and the nature of that payment should be disclosed whether it is a payment by results, fixed fee or otherwise".[354]

Commercial participators

327. A number of submissions suggested that the proposed amendment to the 1992 Act concerning statements by commercial participators would not help to achieve greater transparency. It would simply lead to spurious accuracy because of the difficulty of specifying in advance what the exact return is likely to be from promotional ventures. As Oxfam say in their written evidence, "our concern is that many joint ventures are quite complex".[355] They give the example of the difficulty of specifying the return to a charitable institution from a concert or event. This is because: all the tickets may not be sold; tickets may have different face vales; concessions may be available and the event organiser generally has to deduct expenses which for some events may be difficult to determine precisely in advance. They also give the example of credit cards: charities receive a percentage of the consumers use of the card. Similar relationships exist with internet access providers and mobile phone providers. Oxfam explain that they want "to keep the statement as simple and as accurate as possible at the point of sale" and they "hope there will be some flexibility in how the definition of 'notifiable amount' will be interpreted especially to allow percentage figures", where this is most appropriate.[356]

328. The Charity Law Association expressed similar reservations about whether the provisions reflected the complexity of many of the relationships that fund-raising organisations have with commercial participators. Their view was that more "general provisions supplemented by guidance agreed with charities [would] be preferable. For example, this guidance might allow CPs to express the amount that will pass to charity as a percentage of profits. This would accord with current practice e.g. in relation to sales of Christmas cards".[357]

329. The Charity Law Association also said:

"To our knowledge there have been no criminal prosecutions against Professional Fund-raising Organisations (PFOs) or Charity Promoters (CPs) under the Charities Act 1992. The Crown Prosecution Service appears uninterested. We would recommend that the Charity Commission or possibly Trading Standards be given power to prosecute defaulting commercial organisations".[358]

Conclusion

330. We recommend that clause 35 of the draft Bill should be amended to require all those fund-raising on behalf of charities who are paid for their services (whether under a contract of employment or otherwise) to take all reasonable steps to make this status clear when they are making an appeal. The written material, provided at the time to those making donations by direct debit or standing order, should explain the nature of their remuneration (i.e. whether they are paid a salary, a fixed fee or whether they are paid on a commission basis). In addition, fund-raisers should be required to carry with them a collectors identity card from the charity for whom they are acting stating the remuneration fund-raisers are receiving and this should be available on application when a member of the public requests it. The Home Office should issue guidelines on the information required to be available, including information on remuneration and other information taking into account what is practical, workable and not unduly burdensome. This could be supplemented by requiring that the basis of remuneration of fund-raisers and the ratio of costs to funds raised should be reported in the annual report of the charity.

331. We recommend that the Bill should be amended to say that commercial participators will be required to make as accurate a representation of the return from the venture as is possible in the circumstances. It should specify that new Home Office guidance will be produced covering the different forms of statement appropriate to different types of joint ventures between charitable institutions and companies and that this guidance should be based on extensive consultation with fund-raising organisations and commercial participators. We note that the Charity Commission had already proposed to develop and consult on guidance on the content of statements.

332. In order for these proposals to have any impact there needs to be enforcement. We therefore recommend that the Home Office takes up the recommendation made by the Charity Law Association and considers giving either the Charity Commission or Trading Standards the power to prosecute when these measures are breached.

302 Further information about the Commission including its January report is available on its website: www.busecommission.org.uk Back

303 Q90 (Ms Marsh) Back

304 Q95 (Mr Etherington and Ms Marsh) Back

305 Ev 417, para 16 Back

306 Ev 94 Back

307 Ev 297 Back

308 See p140 of Schedule (points made about the draft Bill) clause 36 Back

309 For this and following background paragraphs, see draft Charities Bill, pp157-158 and 163-168 Back

310 Draft Charities Bill, p162 Back

311 Draft Charities Bill, p136 Back

312 Draft Charities Bill, p136 Back

313 Draft Charities Bill, p136 Back